What follows
here, initially, is my synopsis, simplification and interpretation of some
remarks by David
Stockman. Following that is my
interpretation of some remarks by market analyst Charles Biderman, as reported
by economist Mike Whitney.

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Stockman
says the reason he is so down on the U.S. economy is that it's become
super-saturated with debt. He explains:

Typically
the private and public sectors would borrow $1.50 or $1.60 each year for every
$1 of GDP growth. It had been at that
ratio for 100 years save for some minor squiggles during the bottom of the
Depression.

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However, by
the time we got to the mid-'90s, we were borrowing $3 for every $1 of GDP growth.
And by the time we got to the peak in 2006 or 2007, we were actually
taking on $6 of new debt in order to
grind out $1 of new GDP.

People were
taking $25,000 - $50,000 out of their home for the fourth refinancing. And that's
what was keeping the economy going -- it created jobs in restaurants,
retail, garden care, and Pilates instruction, all of which jobs were not
supportable by way of income from the production of essential goods and
services. Why not? Because there was a grave shortageof such work! In other words,
people were paying for luxuries with
money they had borrowed, which was money that was readily available to them
because of the expanding bubble in the ever-inflating prices of real estate --
which of course couldn't last. (But few
people wanted to (or did) think about that at the time.)

In any case, this is what is known as a bubble

It was
simply spending borrowed money to pay others to service you in one way or
another. Problem was, the vast majority
of the people who were spending this
money did not produce anything of fundamental value for others to purchase.
Instead most of them simply borrowed much if not all of the money they
needed. And the Fed created money out of
thin air at an unprecedented pace.

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Therefore, even
the alleged GDP growth of 1.6% (annual GDP growth over the past decade) is
overstating what was really going on in our economy, and encouraged blindness
as to what is about to happen. How
so? Because, when a country's citizens are finally forced to stop
borrowing at this tremendous frequency (and amount) of borrowing, the rate
of GDP "expansion" inevitably stops as well.

Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)